For many municipal credits (such as loans, bonds, securities, or other obligations) the risk of default is principally a risk of a delay in payment (“timing risk”) rather than a risk that the obligation will never be paid (“ultimate payment risk”). This is recognized by many of the rating agencies in their treatment of State Revolving Fund (“SRF”) pools. For example, STANDARD & POORS assumes that if a default occurs it will last for four years, after which the credit issuer will resume making payments until maturity. In the SRF context, the four-year period is applied to all credits without regard to any issuer specific facts. In other words, the four-year period is applied whether the credits are non-investment grade or “AA”, for example. Consequently, it is believed that four years can be viewed as the outside limit of timing risk for investment grade credits (and arguably the risk period should be shorter for “A” or better credits).
While there are a number of existing mechanisms designed to address the issue of timing risk, it is believed that none of them does so in the context and manner of the instant invention.
Among those benefits and improvements that have been disclosed, other objects and advantages of this invention will become apparent from the following description taken in conjunction with the accompanying figures. The figures constitute a part of this specification and include exemplary embodiments of the present invention and illustrate various objects and features thereof.